China outbound investment jumps as nation boosts global clout

BEIJING (BLOOMBERG) - China's long-term outbound investment is catching up with inbound foreign investment, bringing the country closer to becoming a net exporter of funds as it boosts its global economic clout.

Outbound investment in yuan terms jumped 29.2 per cent in the first half from a year earlier, dwarfing the 8.3 per cent gain in foreign direct investment inflows, the Ministry of Commerce said in a statement in Beijing on Tuesday. Total outward investment was 343.2 billion yuan (S$75.74 billion) during the period, compared with 420.5 billion yuan in FDI.

"The turning point will take place within this year - China will be a net provider of investment funds to the world," said Chen Bingcai, a researcher at the Chinese Academy of Governance. "With institutions like the Asian Infrastructure Investment Bank and Silk Road Fund, China's overseas investment will only accelerate, and this trend will reshape the global economic landscape."

While the recent stock market turmoil may complicate the outlook, Chinese companies are still looking overseas. The investment arm of Chinese President Xi Jinping's university is planning to offer US$23 billion for chipmaker Micron Technology Inc., a person familiar with the matter said earlier this month, in a deal that would be the largest takeover of a foreign firm by a Chinese company.

Dalian Wanda Group, a property developer run by Chinese billionaire Wang Jianlin, has ventured into yachtmaking in Britain and cinema chains around the world.

Foreign direct investment helped China's economic boom in the past three decades, bringing not only funds but also technologies and knowledge. While China is losing its edge in low-end manufacturing as labor costs rise, its services sector remains attractive - FDI in China's financial services surged more than 400 per cent in the first half from a year earlier.

"China's stock market volatility won't change the opening- up course," Chen said. While China's financial regulation may "need improvement" in some aspects, China's political and economic fundamentals remain sound, he said.